Reports suggest that the SFO is currently investigating and prosecuting serious allegations of complex fraud and corruption. The announcement this spring that the SFO had started an investigation into the Bank of England’s actions following the rigging rumours, (as reported by the BBC amongst others) demonstrates its intention to pursue high-profile offenders.
David Green, who was appointed as Director of the SFO in April 2012, promised to prioritise the more difficult cases that may fall outside of the expertise of other bodies. He was reported in Fraud Magazine as saying: “Many had the impression that the SFO had developed a certain nervousness about taking on the very top-level cases for which, in my view, it was designed. I have changed that”
In this blog we:
- look at the new focus of the SFO to combat high level economic crime amongst top level organisations;
- provide examples of SFO success stories, giving details of the current conviction statistics; and
- offer a brief discussion of the impact that the Bribery Act 2010 (“Bribery Act”) has had to date.
“Very top-Level” Investigations
Three years on from the appointment of David Green, the SFO seems to be focusing their attentions on industry giants. The SFO is currently investigating major players including a world renowned luxury car manufacturer, international banks, a household name supermarket, a multinational pharmaceutical company and a leading air travel manufacturer for offences such as overseas corruption, accounting irregularities and fraud. There have been some headline grabbing charges and convictions over the last year including:
- the prosecution of Ulf Magnus Peterson, the head of the collapsed hedge fund Weavering. Peterson received a 13 year prison sentence after being found guilty of fraud, forgery, false accounting and fraudulent trading earlier this year (Reported by the Daily Mail, Bloomberg and the Financial Times);
- the JJB prosecution in which the former Chief Executive of JJB was found guilty of fraud, furnishing false information and attempting to pervert the course of justice and sentenced to a 4 year prison sentence. The beneficial owners of a JJB supplier, were also sentenced to 18 months’ imprisonment for perverting the course of justice (reported by the Guardian, the Telegraph and the BBC); and
- the ongoing Alstom investigation, which saw Mr Lainé (the former Senior Vice President Ethics & Compliance and director of Alstom International Limited) become the sixth person involved to be charged by the SFO (See the SFO press release for more information).
The SFO claims it “has recovered its mojo”, but do the statistics support that? Conviction rates which were as low as 70% for 2012/13, have improved significantly since David Green took charge, reaching 85% in 2013/14. Exaro, the online investigative paper commented that David Green “spent much of his first year as head of the SFO erasing the legacy of his predecessor, Richard Alderman”. At least a portion of the unsuccessful cases brought in 2012 could therefore represent part of that legacy. The recent return to success may also be thanks to the general move away from offering deals to self-reporting corporate bodies, as the new tougher SFO aims for convictions. The SFO has confirmed that “self-reporting is no guarantee that a prosecution will not follow”.
The SFO has now also “rekindled” its relationship with the US Department of Justice (“DoJ”). Previously, the US counterpart felt that the SFO was “interfering in its cases”. Perhaps the improved conviction figures, coupled with the new hardline public image of the SFO under David Green, have given the DoJ a new found confidence in the UK prosecutor. (See Practical Law article: Bribery and corruption: negotiated settlements in a global enforcement environment for more information).
Bribery Act, Anti-climax?
The recent successes have not however been attributed to the introduction of new offences under the Bribery Act. Since 2011, the extent of the impact of the Bribery Act in the UK has been queried – so much so that Stuart Alford QC, Joint Head of Fraud at the SFO, decided to address the following, all too common, question: ‘why have there been no Bribery Act prosecutions; is this Act really being taken seriously?’
In response, the QC highlighted the following key points:
- there have been convictions! The first two convictions under the Bribery Act 2010 took place in December 2014 following the SFO investigation into the £23m AgroEnergy biofuel scam;
- the Bribery Act is not retrospective – therefore, criminal conduct punishable under the Act has to have taken place after 1 July 2011; and finally
- the Bribery Act represents a very significant change and it will take time for corporate ethics to develop as envisaged in the Act. By way of reference, it is helpful to note that it took many years for prosecutions to come through under the 1977 Foreign Corrupt Practices Act in the USA.
According to Stuart Alford QC: “the record in respect of the Bribery Act is not nearly as troubling as some people make out. This is a piece of legislation which is taken very seriously, and you will start to see an increase in the number of prosecutions: both from the SFO and other agencies.”
The new robust SFO should give us plenty to report on in the coming months and perhaps we will start to see more Bribery Act cases over the course of the year.
 Conviction rates as provided in the SFO Annual Reports for 2013 and 2014.